Vast majority of gifts were not made in the USA

Commentary: Shoppers say they’ll Buy American, but they don’t

By

AlanTonelson

Getty Images

Black Friday shoppers wait in the check-out line for over an hour at a Toys-R-Us store in Virginia.

WASHINGTON (MarketWatch) — It’s a heart-warming Christmas story worthy of Hollywood: According to numerous news reports, the nation’s shoppers are abandoning their addiction to imported holiday gifts (especially those made by the repressive, corrupt, job-stealing Chinese) and boosting their own economy by Buying American once again.

And some polls indicate that more than wishful thinking is involved. A Boston Consulting Group survey reports that 93% of U.S. consumers say they would pay more for domestic goods in order to keep jobs at home, and that 80% believe that Buying American demonstrates patriotism.

The only fly in the ointment — the biggest takeaway from the newest, most comprehensive data bearing on national shopping habits — is not how much new Buying American has been taking place, but how little.

These statistics, drawn from new U.S. Business and Industry Council research on import shares of American manufacturing markets, show that foreign dominance of U.S. Christmas gift and other consumer goods purchases may have ebbed slightly between 2010 and 2011. But that foreign dominance remains overwhelming in most products, and the net effect can’t remotely move the U.S. growth and employment needles.

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Further, sectors where such import penetration can be precisely measured represent less than half of Americans’ total annual spending on gift-type consumer products — which increased from an estimated $309 billion in 2010 to some $336 billion in 2011. And for many products for which data is sketchy, U.S. production has never emerged, has disappeared entirely, or has nearly vanished — for instance, personal computers, cell phones, luggage, sneakers, and many apparel categories.

Therefore, the figures presented below surely understate imports’ domination of U.S. consumer spending considerably. Preliminary figures for 2012, moreover, say we should expect much the same picture this year.

USBIC research shows that reliable data is available for 25 gift-oriented consumer products categories. They include toys and games and sporting goods, kitchen utensils and cookware, handheld power tools, electric housewares, and certain types of men’s, women’s, children’s, and infants’ apparel.

The numbers show that imports’ collective share of the total American markets for these items did decline during the last two data years. But the dip was only from some 89% of total consumption of nearly $150 billion in 2010 to 87% of the $157 billion market in 2011.

China’s share of American gift-related purchases is down, too — but not much more than the overall import share. In 2010, more than 46% of this U.S. spending went for products coming from China, and in 2011 the figure still stood at just under 45%.

Overseas producers lost market share to their American rivals in only seven of the 25 categories from 2010-2011. Among these items were some of the largest, especially sporting and athletic goods and games and toys, as well as women’s handbags, power-driven handtools, and kitchenware. Products for which import shares kept rising included all apparel categories, non-athletic shoes, fine and costume jewelry, and household appliances.

China lost market share in 12 of the categories examined from 2010 to 2011, especially in apparel, sporting goods, and toys. But China-based producers expanded their inroads in such categories as gloves, ties, men’s non-athletic shoes, cutlery and flatware, smaller household appliances like vacuum cleaners, household refrigerators, and jewelry.

Some major categories of goods were omitted from the study because the official data shows illogical import-penetration rates of more than 100%.

But anecdotal evidence points to virtual import saturation of these markets, which include products like audio and video equipment, most women’s tailored clothing; men’s pants of all kinds; any athletic footwear; dolls and stuffed toys; and luggage.

Similar assumptions seem justified for personal computers and cell phones. Assuming 100% import penetration rates for those products would bring the total import share of U.S. gift-oriented spending to more than 93% in 2011, and brings China’s 2011 share to more than 50% following a slight dip in 2010.

The detailed manufacturing production data needed to calculate this year’s import penetration rates won’t come out until late next year. But figures for 2012 imports have been released through October, and indicate that foreign-made goods are still wildly popular with American consumers.

Buy American supporters are right to claim that the more consumers substitute U.S.-made goods for imports, the more growth and hiring the economy will generate. But the best evidence demonstrates that appeals to patriotism and creative, energetic marketing campaigns can’t remotely generate the progress that’s needed.

Significantly boosting Americans’ purchases of U.S.-made consumer goods will require working much harder for fundamental change in the nation’s international trade policy. That goes double for better performance in much larger industrial goods markets, where big recovery and job gains are genuinely possible.

For as long as overseas manufacturers can keep supplying U.S. markets from factory conditions Americans would never accept at home, and to enjoy subsidies that American manufacturers will never receive, the nation’s holiday seasons will remain largely foreign-made, and the larger economy will keep badly under-performing.

Alan Tonelson is a fellow at the U.S. Business and Industry Council, which represents nearly 2,000 small and medium-sized manufacturers.

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